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Investors fear no limit to BP damages

Financial Times

By Ed Crooks

Published: June 10 2010 22:15 | Last updated: June 10 2010 22:15

The reason investors have been panicking about BP over the past couple of days is that the US administration has apparently crossed a line in its determination to take action against the company.

When Ken Salazar, the interior secretary, said he would hold BP responsible for the wages of workers on oil rigs who lost their jobs, he raised the prospect that the cost to BP could be limited only by the administration’s restraint.

The concern for BP’s investors is not just the extra cost in itself, which could potentially run into billions, but the signal it sends on how far the administration is prepared to stretch the definition of damage caused by the spill.

By the same logic, the government could pursue BP for the tax revenues it will not earn on the operations shut down by the drilling ban. The possibilities for similar claims are endless.

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